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According to Reuters, President-elect Donald Trump has threatened to impose tariffs on the European Union if its member states do not purchase more oil and gas from the United States.
“I’ve told the European Union that they have to make up for their massive trade deficits with the United States by buying our oil and gas, or we’ll be tariffing the hell out of them!” he said on Truth Social.
As the world’s largest crude oil producer and a major exporter of liquefied natural gas (LNG), the U.S. has been in discussions with LNG buyers, including the EU, to purchase more fuel, partly to avoid potential tariffs.
EU officials and member states have been bracing for potential trade blows since Trump’s reelection as U.S. President. In 2017, most of the bloc was caught off guard when Trump imposed tariffs on European aluminum and steel due to “national security concerns.”
Last November, European Commission President Ursula von der Leyen proposed to Trump that the U.S. could supply more LNG to the EU as an alternative to Russian supplies.
“We still import a lot of LNG from Russia, so why not replace it with cheaper U.S. LNG, which would also help lower the EU’s energy prices,” she said.
The U.S. was Europe’s top oil and gas supplier in Q3 2024
Currently, Europe is the largest destination for U.S. LNG, accounting for over half of its exports. According to data from the EU’s statistics agency, Eurostat, the U.S. supplied 47% of the bloc’s liquefied natural gas (LNG) and 17% of its oil imports in the first quarter of 2024. Meanwhile, the U.S. goods trade deficit with the EU stood at nearly $162 billion in 2023, with $108 billion of that in services.
Energy analysts say the U.S. would need to expand its LNG production to supply more to the EU. Florence Schmit, an energy strategist at Rabobank, said, “The main issue is that the U.S. currently does not have spare LNG capacity to send to Europe,” adding that European countries would have to pay more than Asian buyers.
Trump has previously stated that he views tariffs as a significant negotiating tool with other countries. He has also threatened to impose a 25% tariff on Mexico and Canada to force them to step up border security to curb illegal immigration into the U.S. and a 10% tariff on Chinese goods to pressure the country to crack down on the flow of opioids into the United States.
References: FT, Reuters
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